SHRI RAJENDRA LAXMANBHAI MAKWANA,AHMEDABAD vs. THE INCOME TAX OFFICER, WARD-7(2)(4), AHMEDABAD

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ITA 3270/AHD/2016Status: DisposedITAT Ahmedabad08 April 2022AY 2012-1334 pages
AI SummaryPartly Allowed

What did the Tribunal hold?

The Tribunal held that for the purpose of computing Long Term Capital Gain, the cost of acquisition as on 01.04.1981 should be taken at Rs. 250/- per sq. yard, as determined by the Registered Valuer, allowing Ground No. 2 of Shri Subodh Laxmanbhai Makwana's appeal. Regarding the issue of construction, the Tribunal concluded that what was transferred was non-agricultural open land without any residential construction thereon, dismissing Ground No. 3 of Shri Subodh Laxmanbhai Makwana's appeal and a similar issue in Shri Rajendra Laxmanbhai Makwana's appeal. Consequently, the Tribunal held that the assessee was not entitled to exemption under Section 54 of the Act but was entitled to exemption under Section 54F of the Act, dismissing Ground No. 4 of Shri Subodh Laxmanbhai Makwana's appeal and a related issue in Shri Rajendra Laxmanbhai Makwana's appeal. The operative direction was to allow the cost of acquisition at Rs. 250/- per sq. yard and grant exemption under Section 54F.

What were the facts?

The appeals by two assessees, Rajendra Laxmanbhai Makwana and Subodh Laxmanbhai Makwana, for Assessment Year 2012-13, concern common issues arising from the sale of jointly owned immovable property. The property, inherited from their father, comprised land and construction. The assessees declared Long Term Capital Gain (LTCG) after claiming exemptions. The Assessing Officer (AO) questioned the valuation of the land, the inclusion of construction cost, and the exemptions claimed. The AO's primary contention was that only open land was transferred, not residential or commercial construction, and that the fair market value of the land as on 01.04.1981 was lower than claimed by the assessees. The assessees' appeals were directed against the orders of the Commissioner of Income-Tax (Appeals).

What were the issues?

1. Whether the Tribunal had to decide the correct fair market value of the immovable property as on 01.04.1981 for computing Long Term Capital Gain, and if the AO erred in substituting the value determined by the Registered Valuer (Section 55A of the Income Tax Act, 1961). - Assessee's contention: The value determined by the Registered Valuer should be accepted. - Revenue's contention: The AO correctly identified mistakes in the valuation report and substituted a lower rate. 2. Whether the Tribunal had to decide if the sale of the property included any residential or commercial construction, and if the assessee was entitled to a deduction for the indexed cost of construction (Section 55 of the Income Tax Act, 1961). - Assessee's contention: Construction was part of the sale, and indexed cost should be allowed. - Revenue's contention: Only open land was transferred, as evidenced by the sale deed. 3. Whether the Tribunal had to decide if the assessee was entitled to exemption under Section 54 of the Act for investment in a residential house, or alternatively, under Section 54F. - Assessee's contention: Entitled to exemption under Section 54. - Revenue's contention: Not entitled to Section 54 exemption as no residential construction was transferred.

Which sections of the Income-tax Act were involved?

Section 54,Section 54F,Section 55,Section 55A

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “A” BENCH, AHMEDABAD

Before: SHRI P.M. JAGTAP, VICE-

For Appellant: Shri Sakar Sharma, AR
For Respondent: Shri S.S. Shukla, Sr. DR
Hearing: 31/03/2022Pronounced: 08/04/2022

Heard together (2 matters)

ITA No. 3270/Ahd/2016
ITA No. 1183/Ahd/2017

Read from the judgment's own cause title. This page is filed under one of them.

आयकर अपील"य अ"धकरण, अहमदाबाद "यायपीठ ‘A’ अहमदाबाद । IN THE INCOME TAX APPELLATE TRIBUNAL “A” BENCH, AHMEDABAD ] ] BEFORE SHRI P.M. JAGTAP, VICE-PRESIDENT AND MS. MADHUMITA ROY, JUDICIAL MEMBER Assessment Year : 2012-13 Rajendra Laxmanbhai Makwana, Income Tax Officer, N-102, Parikar-1, Vs Ward-7(2)(4), Nr. Khokhara Circle, Ahmedabad Amraiwadi, Ahmedabad-380026 PAN: AFLPM 2848 C Assessment Year : 2012-13 Subodh Laxmanbhai Makwana, Income Tax Officer, M-302, Parikar-1, Vs Ward 1(3)(5), Nr. Khokhra Circle, Khokhra, Ahmedabad Ahmedabad-380008 PAN : BICPM 9739 D अपीलाथ"/ (Appellant) "" यथ"/ (Respondent) Assessee by : Shri Sakar Sharma, AR Revenue by : Shri S.S. Shukla, Sr. DR सुनवाई क" तार"ख/Date of Hearing : 31/03/2022 घोषणा क" तार"ख /Date of Pronouncement: 08/04/2022 आदेश/O R D E R PER P.M. JAGTAP, VICE-PRESIDENT :

These two appeals filed by two assessees against two separate orders passed by learned Commissioner of Income-Tax (Appeals)-7, Ahmedabad dated 28.09.2016 and by Commissioner of Income-Tax (Appeals)-10, Ahmedabad dated 10.02.2017 for Assessment Year 2012-13 involve some common issues relating to the computation of Long Term Capital Gain arising from the sale of capital asset being immovable property jointly owned by two assessees and the same, therefore, have been heard together and are being disposed of by a single consolidated order for the sake of convenience. & 3270/Ahd/2016 Subodh & Rajendra L Makwana Vs. ITO AY : 2012-13 2

2.

First we shall take up the appeal filed by Shri Rajendra Laxmanbhai Makwana being Commissioner of Income-Tax (Appeals)-7, Ahmedabad dated 28.09.2016.

3.

The relevant facts of the case giving rise to this appeal are that the assessee, who is an individual, filed his return of income for the year under consideration on 21.07.2012 declaring total income of Rs.3,74,560/-. During the year under consideration, the assessee along with his two brothers namely Shri Yogeshbhai Laxmanbhai Makwana and Shri Subodhbhai Laxmanbhai Makwana had sold an immovable property situated at Saijpura, Naroda, Ahmedabad jointly owned by them to M/s. Shanti Infra Developers, a partnership firm, for a total consideration of Rs.5,04,43,000/-. The said property comprising of 5327 sq. yards of non-agricultural land bearing final plot No.44 and Krishna Colony plot of 627 sq. yards along with the construction was acquired by the assessee and his brothers by way of inheritance after the death of their father late Shri Laxmanbhai Panchabhai Makwana on 21.06.1986. In the return of income filed for the year under consideration, his 1/3rd share in the Long Term Capital Gain arising from the sale of the said property was declared by the assessee at Rs.42,55,172/- and after claiming exemption of Rs.40,84,868/- under Section 54 of the Act, Long Term Capital Gain of Rs.1,70,304/- was offered to tax. As noted by the Assessing Officer, Banakhat in respect of this transaction was executed on 15.10.2010 while the final sale deed was registered with the Sub-

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